Financial advisers have filed an open class action against AMP Financial Planning (AMPFP), part of AMP, in Australia.
The dispute stems from AMP’s restructure of its wealth business and reduction of its adviser network, which saw it cut the sum it would pay advisers under its buyer of last resort (BOLR) terms.
Originally, planners received four times recurring revenue, but under the changes AMPFP was only going to pay a maximum of two and a half times.
Those who are taking part in the class action are both former and current advisers at the financial planning firm.
Neil Macdonald, chief executive of The Advisers Association, said: “We would have preferred, and we continue to prefer, that AMPFP work with the association to negotiate fair and reasonable outcomes for all members.
“This is obviously imperative for those who are exiting, but it is just as important to those who are staying, so that they can continue to provide Australians with affordable access to financial advice.”
The Australian Small Businesses and Family Enterprise Ombudsman received over 100 complaints from AMP planners about the BOLR changes and has referred 60 claims for mediation.
Australian senator Deborah O’Neill has also called for a review into AMP’s behaviour.
Threat to livelihood
Macdonald added that many planners had bought businesses from AMPFP at four times recurring revenue on the promise that the firm would acquire their businesses back on the same multiple when they left.
“In most cases, [the businesses] were funded by AMP Bank loans or via another tripartite banking arrangement, again at four times recurring revenue.
“In many cases advisers had to put up their family homes as security and are now at risk of losing them. Many of our members stated they had little choice but to join the class action,“ he said.
AMP has acknowledged the class action, saying: “AMPFP is confident in the actions it took in 2019 and will defend the proceeding accordingly”.